Reform, outdated EPZs advised

HCM CITY (VNS) — Between 60 and 70 per cent of equipment and technologies used at export processing and industrial zones is outdated, resulting in products with low added value, the HCM City People's Committee has said.

The committee has asked the HCM City Export Processing and Industrial Zone Authority (HEPZA) to restructure business operations of industrial zones, most of which have been operating for about 20 years.

The city asked HEPZA to examine enterprises' capital, technology, products, land-use efficiency, and employees' professional skills.

The city said that Freetrend Company in Thu Duc District's Linh Trung Processing Zone, for example, did not operate efficiently.

It has a 110,000 sq m plant and 21,000 workers to process footwear for many international brand names. Its turnover is VND1.4 trillion (US$67 million) a year but the company only contributes VND22 million ($1,000) in tax.

At least 100 companies in the city are operating with a similar low economic efficiency, the committee said.

According to HEPZA's management board, most foreign projects are labour-intensive with low added value, especially in electronic assembling, footwear, and textiles and garments.

Seventy-three percent of enterprises in HEPZAs are small enterprises with capital under $5 million.

Very few of them produce high added value products. When the industrial zones first opened, the focus was simply on creating new jobs. There were few standards applied to technology, capital or management skills.

In 2013, only 1 per cent of enterprises had modern technology, while 51 per cent had outdated technology.

Links between foreign and local enterprises were also poor as most foreign companies imported equipment and raw materials.

To implement business restructuring, the city plans to focus on technology investment, shifting from processing to manufacturing technology to increase value addition and enhance competitiveness.

The city will invite only investors with high added value production and green technology, and it will focus on support industry and services to industry.

Labour-intensive companies and low- and medium –level technology enterprises will receive support to restructure their business.

Product design and manufacturing capability and ISO quality management application will also be speeded up.

The number of workers in the engineering industry has increased by 15.6 per cent, electricity-electronics 9 per cent, pharmaceutical chemistry 14.6 per cent and food processing 21.6 per cent, compared to the same period last year.

"There are 7,000 excellent workers being sent to train in developed countries like Japan, South Korea, Singapore and Thailand," Hoa said.

He said that seven low-technology and labour-intensive projects in Linh Trung Processing Zone and eight others in Tan Thuan Processing Zone had moved to the Mekong Delta provinces of Ben Tre and Tra Vinh.

"The infrastructure on the empty land will be upgraded, and we'll look for high-technology projects," he said. — VNS